Posts tagged ‘Azerbaijan’

Azerbaijan has long been seen as a strategic gateway to vast oil and gas resources in the Caspian region and a source of energy security for Europe but has yet to live up to its promise as a bulwark against the influence of Russia and OPEC in the region.

Richard Kauzlarich was among the Washington energy policy watchers surprised by the Obama administration’s 11th-hour halt to the Dakota Access oil pipeline, September 9. The contentious pipeline project reminded him of another energy era in a very different part of the world.

Oil-rich Azerbaijan is being rattled by disruption and attacks on pipelines, highlighting its tough geopolitical position and adding to worries about falling oil prices.

Having been courted by previous US governments, international interest in Azerbaijan and fellow Caspian producer Kazakhstan has waned in recent years, not least because of the increase in US shale oil production. Azerbaijan’s oil production is, in any case, thought to have peaked.

But with 848,000 b/d of output last year, Azeri production still matters.

In Russia, energy and politics are rarely far removed from each other. Moscow is renowned for its use of oil and gas as a tool (or a weapon, depending on how you look at it) to get its own way, particularly with its former Soviet neighbors.

Georgia, the Baltic countries, Armenia and Kyrgyzstan are just some of the ex-Soviet Union states stung by Moscow over energy. And Ukraine’s treatment has over the past 10 years seemed sometimes brutal, with Russia leaving it out in the cold by switching off gas supplies because of price disputes.

A project that’s still a few years away is going to be key for both BP and Azerbaijan. For the former, it’s going to be a significant test of a new technology; for the latter, it’s another step in trying to increase its hydrocarbons output. John Roberts discusses both goals in this week’s Oilgram News column, At The Wellhead.

June ended with some major and long-awaited developments in the world of European gas.

In no particular order: the Shah Deniz consortium picked the winner for the 10 Bcm/year Caspian Sea gas pipeline project; the UK government announced that it had enough gas trapped in a part of its shale rock to last it for 43 years; Cyprus signed agreements with producers that could lead to an LNG export project later this decade; and Israel came up with a compromise on the amount of gas that may be exported: some 400 billion cubic meters in total over a few decades.

The decline in Azeri production is certainly going to be high on a list of things that BP’s CEO Bob Dudley is going to be asked about on an upcoming visit to Azerbaijan. In today’s Oilgram News column “At the Wellhead,” John Roberts discusses some of the concerns that Dudley may hear from his Azeri hosts.

It sometimes seems as if the whole saga of the EU’s pet project to develop a Southern Gas Corridor is contained in that paradox. As a result of Nabucco’s prominence, not least in the minds of European politicians, it is as if everything to do with carrying Caspian gas to Europe is seen through the prism of the ten-year-old effort to develop the Nabucco pipeline.

So when two of the principal parties involved, Azerbaijan and Turkey, announce they are going to build a different line, the cry goes up: ‘Nabucco is dead!’

By October 1, the three rival groups wanting to develop pipelines to carry Azerbaijani gas to Europe must make their final submissions.

It must be a nightmare, preparing the documentation for their bids. They each know the strengths and weaknesses of their rivals; they each know that none of their bids will perfectly suit Azerbaijan’s requirements. How do they know this? They know it because for years they’ve taken part in countless panels to consider the merits-and faults-of each proposal. If any one of them had even come close to developing a clearly superior system, they would have already secured Azerbaijani agreement for a new export line.